PETALING JAYA: Telecommunication companies could benefit from investors interested in environmental, social and corporate governance (ESG) as they are well-positioned to serve as ESG enablers, helping other industries address ESG issues.
This could mean new revenue streams for telcos such as IoT solutions, mobile banking and mobile education.
That said, telcos would need to work out on how to monetise these opportunities, said MayBank IB Research.
Looking at Digi.com Bhd – one of the three big mobile players in the country – Maybank IB said the company’s ESG stance was heavily influenced by its parent, Norway’s Telenor ASA.
Telenor is headquartered in a jurisdiction that arguably conforms to higher ESG standards, said the research firm.
“Fundamentally, we view Digi’s risk-reward as being merely balanced presently, ’’ said the research house, pointing out that Digi is proactive with capital management, having already exhausted its retained earnings through the payment of special dividends in the past.
It now maintains a 100% dividend payout ratio.
Digi’s current dividend yield of about 4% is the highest among Malaysian telcos.
The research firm said that in the overall scheme of things, the ESG pressure faced by telcos is benign.
Telcos are not major emitters and thus pose a less significant threat to the environment.
It said key social issues such as digital inclusion and data protection can generally be well-managed.
Digi is targeting a 50% reduction in carbon emissions by 2030 from a 2018 baseline.
It has reduced fuel dependency by converting 156 generator-powered sites to grid-powered, thus reducing Scope 1 emissions.
Electricity consumption has also been optimised through a reduction of running hours during low-peak traffic cycles.
Over 900 sites have been identified to undergo installation of exhaust fans to minimise power consumption used in cooling systems, Maybank IB said.
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